The Federal Reserve Board of the United States held a meeting to decide on monetary policy and announced on the 31st that it had decided to leave the policy interest rate unchanged.
This is the fourth consecutive meeting in which the Fed has kept interest rates unchanged as inflation continues to slow.
As strong economic growth continues, the focus is on when the Federal Reserve will cut interest rates, and the market is paying close attention to what Chairman Powell will say at his press conference.
The Fed began raising interest rates in March 2022.
The current zero interest rate policy will be lifted and monetary tightening will be introduced.
The aim was to suppress inflation by cooling the economy through monetary tightening.
However, even after that, there was no sign of an end to inflation, and the consumer price index in June 2022 increased by 9.1% compared to the same month of the previous year, the highest level in about 40 years. .
For this reason, the Fed decided to significantly raise interest rates by 0.75% four times in a row from June 2022 to its November meeting.
The rate of increase in the consumer price index announced afterward continued to be lower than the previous month, so the Federal Reserve Board held meetings in December 2022, January 31, and February 1, 2023. The rate of interest rate hikes will be reduced one after another.
However, due to the effects of rapid interest rate hikes, three banks, including Silicon Valley Bank and First Republic Bank, went bankrupt between March and May 2023.
This was because the prices of the bonds held by banks fell sharply, forcing them to sell them, incurring large losses, and raising concerns about their management.
Even under these circumstances, the Federal Reserve has shown a stance of prioritizing inflation control and has decided to raise interest rates by 0.25% in March and May 2023, respectively.
Since March 2022, interest rates have been raised 10 times in a row.
At the June meeting, the Bank decided not to raise interest rates in order to assess the impact of previous monetary policy, including rapid interest rate hikes.
This is the first time that interest rate hikes have been postponed since March 2022.
On the other hand, at the meeting in July 2023, it was decided to raise interest rates by 0.25% due to the continuing labor shortage, which is a factor in inflation.
The policy interest rate ranged from 5.25% to 5.5%, the highest level in 22 years since 2001.
The Fed has now raised interest rates a total of 11 times since March 2022.
Subsequently, at the September-December 2023 meeting, the market held off on raising interest rates for three consecutive meetings due to factors such as the rise in prices calming down and signs of improvement in the labor shortage, which was a factor of inflation. There was a growing belief that the situation was over.